Page 52 - BusinessWest April 14, 2021

Numbers
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MEASURES AFFECTING BUSINESSES
The ARP also contains provisions designed to assist businesses — small businesses in particular.
Small Businesses and Paycheck Protection Program
An additional $7.25 billion is allocated to assist small businesses and the PPP forgiven loans. The current eligi- bility rules remain unchanged for small businesses wish- ing to participate in the PPP, although there is a provision that will make more nonprofit organizations eligible for a PPP loan if certain requirements are met.
The PPP — which was originally created as part
of the Coronavirus Aid, Relief, and Economic Securi-
ty (CARES) Act enacted on March 27, 2020 — is designed to help small businesses that have suffered from disrup- tions and shutdowns related to the coronavirus pan- demic and keep them operational by granting federally guaranteed loans to be used to retain staff at pre-COVID levels. A PPP loan may be forgiven in whole or in part if certain requirements are met.
The Economic Aid Act, which is part of the CAA, ear- marked an additional $284 billion for PPP loans, with specific set-asides for eligible borrowers with no more than 10 employees or for loans of $250,000 or less to eli- gible borrowers in low- or moderate-income neighbor- hoods. The program has recently been extended from March 31, 2021 to May 31, 2021.
Employee Retention Credit (ERC)
The ERC, originally introduced under the CARES
Act and enhanced under the CAA, aims to encour-
age employers (including tax-exempt entities) to keep employees on their payroll and continue providing health benefits during the COVID pandemic. The ERC is a refundable payroll-tax credit for wages paid and health coverage provided by an employer whose operations were either fully or partially suspended due to a COVID- related governmental order or that experienced a signifi- cant reduction in gross receipts.
The CAA extended the eligibility period of the ERC to June 30, 2021, increased the ERC rate from 50% to 70% of qualified wages, and increased the limit on per-employee wages from $10,000 for the year to $10,000 per quarter ($50,000 per quarter for startup businesses). The ARP also extends the ERC until Dec. 31, 2021 under the same terms as provided in the CAA.
Other Measures
• Employers offering COVID-related paid medical leave to their employees will be eligible for an expanded tax credit through Sept. 30, 2021.
• The ARP increases the proposed subsidies of insurance premiums for individual workers eligible for COBRA, after they were laid off or had their hours reduced, to 100% through Sept. 30, 2021.
• Funds are allocated for targeted Economic Injury Disaster Loan advance payments, as well as for particu- larly hard-hit industries such as restaurants, bars, and other eligible food and drink providers, shuttered venue operators, and the airline industry.
• Effective for taxable years beginning after Dec. 20, 2020, the ARP repeals IRC section 864(f ), which allows U.S.-affiliated groups to elect to allocate interest on a worldwide basis. This provision was enacted as part of the American Jobs Creation Act of 2004 and has been deferred several times. The provision is relevant in com- puting the foreign tax-credit limitation under IRC section 904.
• The ARP does not cancel student-loan debt, but there is a provision that would make student loan for- giveness passed between Dec. 31, 2020 and Jan. 1, 2026 tax-free (normally, the cancellation of debt is considered taxable income).
• A deduction will be disallowed for compensation that exceeds $1 million for the highest-paid employees (such as the CEO, CFO, etc.) for taxable years beginning after Dec. 31, 2026.
• The limitation on excess business losses of non-cor- porate taxpayers enacted as part of the Tax Cuts and Jobs Act will be extended by one year through 2026.
• The threshold for third-party payment processors
to report information to the IRS is lowered substantially. Specifically, IRC section 6050W(e) is revised so that the current threshold of $200,000 for at least 200 transactions is reduced to $600. As a result, such payment processors will have to provide a Form 1099K to sellers for whom they have processed more than $600 (regardless of the number of transactions). This change, which applies to tax returns for calendar years beginning after Dec. 31, 2021, will bring many more sellers, including ‘casual’ sell- ers, within the 1099K reporting net.
If you have questions about any of the items above, reach out to your tax professional, who will be able to navigate you through any portion of the American Res- cue Plan Act and how it may affect you. u
Jim Moran, CPA, MST is a tax manager at Melanson, advising clients on individual and corporate tax matters; [email protected]
Remote
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The intent for most states is to minimize any tax impact for both employees and employers if an employee’s work location has changed solely due to the COVID-19 pandemic.
However, one state has decided the Mas- sachusetts provisions are unfair to its resi- dents. Prior to the pandemic, New Hamp- shire’s southern border saw a steady stream of workers heading into Massachusetts on a normal workday. With the pandemic and the stay-at-home orders, many of these employ- ees converted to working at their residence in New Hampshire, which does not have an individual income tax.
Therefore, with Massachusetts indicating that these wages were still going to be consid- ered Massachusetts wages and therefore tax- able, the governor of New Hampshire felt this was unfair to their residents and has filed a lawsuit in the U.S. Supreme Court over Mas- sachusetts’ “unconstitutional tax grab.”
New Hampshire Gov. Chris Sununu has argued that “Massachusetts cannot balance its budget on the backs of our citizens and punish our workers for working from home to keep themselves, their families, and those around them safe.” This lawsuit was filed in October 2020. Stay tuned.
Remote working becomes even more complicated when employees telecommute in a different state from which they typi- cally work, and this will begin to impact the employee’s eligibility for local leave (i.e., sick leave).
As the pandemic continues, and with some states having set ending dates for some of these relief provisions, employers may con- tinue to have employees who work remotely, either by choice or convenience. The taxabil- ity of which state the wages should be taxed in will need to be revisited by employers and employees alike. u
Cheryl Fitzgerald, CPA is a senior manager at Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.
Kids
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field Public Schools, local therapists, and, critically, a group of 11 teenagers who meet regularly.
The question at the center of the initiative is simple, Collins said. “How do we best support kids? It might sound basic, but it’s fairly new; there has not been an emphasis on the men- tal health of kids except in extreme cases, where the kids have to go into inpatient care.”
One takeaway so far is that teens don’t feel fully heard by the distracted adults in their lives.
“What we’re hearing, loud and clear, from our young people is, when they talk to adults, adults are not skilled at supporting them,” Collins said. “Adults are stressed, adults are stretched, and that just adds to this epidemic of young
people feeling hopeless and alone and unsupported.”
That’s why the Public Health Insti- tute is talking about what kind of train- ing adults — those who work in pre- school and school programs, but also parents — might need to learn how to better listen to young people and work through and respond to what they’re hearing.
“These big direct-service providers are really competitive, so to get them in a room to talk about how can we work together to better support families, instead of just competing for them, that’s fairly new,” Collins said, add-
ing that Daniel Warwick, Springfield’s superintendent of Schools, has also been on board with efforts like this for a long time.
For example, when he saw a 2017
report by PHIWM about the hopeless- ness felt by local teens who don’t iden- tify as heterosexual, “he was so upset about that, a few years ago, he man- dated some training for all Springfield public-school adults to better support kids who are LGBTQ+.”
Take It Seriously
That’s a good example of listening to young people and then taking them seriously — which is one way to nor- malize mental-health needs, Collins said. “If you can’t talk about it, you can’t figure out for yourself what you need.”
And one thing young people need right now is reconnection. While many kids are tired of the technology-only avenues for connecting with friends, Crenshaw said, Zoom calls, text chats, and the like have been an overall posi-
tive in staying in touch. But she also encourages kids and families to take opportunities to see friends and loved ones in person, in a safe manner, when possible.
“You can go to the park; you can go outside with a soccer ball, wear your mask, and connect. Some families have said, ‘we can’t do this alone,’ and became part of each other’s bubble, taking turns doing homeschooling. We encourage these ways of connecting with each other.”
And don’t give up on trying to talk to your kids, Burgess said, even when they don’t feel like talking back.
“The most important thing any par-
Kids
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